IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Zachary Lester, et al., :

 

Plaintiffs, : Case No. 2:11-cv-00850

 

v. :

 

Wow Car Company, Ltd., : JUDGE EDMUND A. SARGUS, JR.

et al., Magistrate Judge Kemp

:

Defendants.

 

OPINION AND ORDER

This matter is before the Court to consider whether this

Court’s opinion and order issued on November 13, 2013 should be

reaffirmed or reconsidered. Defendants filed a motion to

reconsider the order with the assigned District Judge, but, as

explained below, Judge Sargus remanded the underlying discovery

motion to the Magistrate Judge for reconsideration in light of

his Opinion and Order of November 14, 2013. For the reasons set

forth below, the Court reconfirms the original discovery order.

I. Background

This case involves a dispute over the purchase of a used car

by plaintiffs Zachary and Brandi Lester. The Lesters returned

the car to the seller twice within the first week they owned it,

and the engine blew six days after the purchase. As a result of

these events, the Lesters filed a lawsuit in the Court of Common

Pleas for Knox County, Ohio, which was removed to this Court on

September 21, 2011. The Lesters filed an amended complaint on

July 31, 2012, and a second amended complaint on August 26, 2013.

There has been considerable debate in this case concerning

who actually sold the car to the Lesters. It appears to be

defendants’ position that the Lesters bought their car from Amy

Hartzler, who was operating Wow Car Company as a dba. However,

the Lesters claim that Amy Hartzler and Max R. Erwin, Sr., who,

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they claim have both a business and a personal relationship,

operated Wow Car Company as a joint venture and that the two of

them either created or maintained other businesses for the

purpose of shielding that joint venture from liability. More

specifically, they claim that Mr. Erwin owned or operated Wow Car

Company, Ltd. (“Wow Ltd.”), Wow’s eventual successor, and a

company called Marmax Enterprises LLC (“Marmax”) as an alter ego

for Wow and Wow, Ltd. and that he used that company to purchase

inventory for the Wow businesses. The Lesters also allege that

Ms. Hartzler owns Mid-Ohio Motor Funding Group, Ltd. (“MidOhio”), which provides funding to another business owned by Ms.

Hartzler, the Hartzler-Erwin Group LLC (“Hartzler-Erwin”). The

Lesters claim that Hartzler-Erwin is also used to operate Wow and

is an alter ego for Wow and Wow Ltd. 

Consistent with the Lesters’ theory that Ms. Hartzler and

Mr. Erwin are using other entities for the purposes of escaping

liability, the Lesters filed a second amended complaint against a

number of defendants including Ms. Hartzler dba Wow, Wow Ltd.,

Mr. Erwin dba Wow, Mid-Ohio, Hartzler-Erwin, and Marmax. In that

complaint (Doc. #80), the Lesters pleaded claims for breach of an

express warranty, breach of the implied warranty of

merchantability, breach of the implied warranty of fitness for a

particular purpose, deceptive trade practices, violations of the

Truth in Lending Act (“TILA”), violations of the Ohio Consumer

Sales Practices Act (“OCSPA”), and alter ego. 

On August 23, 2013, the Lesters served a subpoena on a nonparty The Home Loan Savings Bank (“Home Loan”). That subpoena

asked Home Loan to produce

Copies of the following documents for all accounts

bearing the signatory authority of, or in the name(s) of:

a) Amy Hartzler; 

b) Max R. Erwin, Sr.;

c) Wow Car Company;

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d) Wow Car Company, Ltd.;

e) Mid-Ohio Motor Funding Group, Ltd.;

f) The Hartzler-Erwin Group, LLC; and

g) Marmax Enterprises, LLC.

1. Documents pertaining to all open or closed

checking, savings, or other deposit or accounts in

the name of or under signature authority of any of

the named parties or entities, including but not

limited to:

a. Signature cards;

b. Articles of Incorporation;

c. Articles of Organization;

d. Bank statements for the period January 1,

2010 through the present;

e. Applications to open bank accounts,

whether approved or denied, and any

supporting documentation submitted with said

applications; and

f. Applications to open accounts for credit,

whether approved or denied, and any

supporting documentation submitted with said

applications.

2. Records of communications you have for each of

the named parties and entities.

(Doc. #81, Ex. A). On September 5, 2013, defendants filed a

joint motion to quash the subpoena served upon Home Loan “and/or

for a protective order forbidding the disclosure or discovery of

the requested bank documents.” Id. at 1.

On November 13, 2013, this Court issued an opinion and order

on the joint motion to quash the subpoena and/or for a protective

order. (Doc. #93). In doing so, the Court first addressed

defendants’ argument that the subpoena was issued in violation of

Fed. R. Civ. P. 26(d). Because the Rule 26(f) report reflected

that counsel for both sides met and conferred and the rule does

not require a conference to be held subsequent to the filing of

an amended complaint even if it joins new parties, the Court

declined to quash the subpoena on that basis. Next, the Court

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determined that defendants had standing to move to quash the

subpoena issued to Home Loan, where the information sought from

Home Loan consisted of defendants’ banking records. Finally, the

Court noted that defendants were, in essence, asking the Court to

stay discovery pending determination of their motion to dismiss

filed on September 9, 2013. The Court, in the exercise of its

discretion, declined to stay discovery pending a resolution of

the motion to dismiss. Based upon these findings, the Court

denied the joint motion to quash the subpoena and/or for a

protective order.

The following day, on November 14, 2013, the District Judge

issued an opinion and order addressing, inter alia, defendants’

motion to dismiss.1 In the opinion and order, the Court first

found that the Lesters sufficiently pleaded that Mr. Erwin

engaged in a joint venture with Ms. Hartzler. Accordingly, the

Court denied the motion to dismiss as it related to that claim. 

Next, the Court granted defendants’ motion to dismiss the TILA

claims against Mr. Erwin, Mid-Ohio, Hartzler-Erwin, and Marmax. 

The Court also granted the motion to dismiss the Lesters’ implied

warranty claim, but it denied the motion as to the Lesters’

express warranty claim. As to the Lesters’ alter ego claims, the

Court found that those claims “should be dismissed without

prejudice to re-filing if the Lesters establish liability on

behalf of the defendants against whom the remaining claims are

filed in the instant action.” (Doc. #94 at 13). Thus, the Court

granted the motion to dismiss the alter ego claims and dismissed

1 The opinion and order also addressed whether the statute of

limitations had run on the Lesters’ supplemental OCSPA claims

against Max Erwin, Sr., finding that the claims were brought

within the relevant time period. On this basis, the opinion and

order sustained the Lesters’ objection to a prior order and

amended the second amended complaint in accordance with its

decision. 

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those claims without prejudice.

On November 20, 2013, defendants filed an objection to the

November 13, 2013 opinion and order. (Doc. #96). Defendants

claim that because the alter ego claims against Mr. Erwin,

Hartzler-Erwin, Wow, Ltd., Mid-Ohio, and Marmax have been

dismissed, “the subpoenaed documents can no longer be relevant to

any claim remaining in the case.” Id. at 2. Consequently,

defendants assert that the motion for a protective order as to

the banking records of these defendants should now be granted. 

As to the joint venture claim against Ms. Hartzler and Mr. Erwin,

defendants argue that all of the banking records and checks

related to the sale of the Lesters’ vehicle have been produced. 

Defendants argue that the “subpoena to Home Loan thus seeks

documents wholly irrelevant to this case and which are not likely

to lead to the discovery of admissible evidence.” Id. at 3.

The Lesters oppose defendants’ objection, arguing that the

documents in question were found to be relevant to the joint

venture and successor liability allegations, in addition to the

alter ego claims. Accordingly, the Lesters maintain that

defendants’ banking records are relevant to establishing “a joint

venture in the operation of Wow Car Company by Hartzler, Erwin,

and companies that are wholly owned by Defendants and used in the

operation of Wow Car Company.” (Doc. #98 at 3). Plaintiffs urge

that the documents are also relevant to “Wow Car Company, Ltd.’s

successor status,” in that “the Marmax account was used to

finance the operation of Wow Car Company.” Id. at 3-4.

In the reply in support of their objection, defendants

reiterate their position that the banking records relate solely

to the Lesters’ dismissed alter ego claims and are no longer

relevant given the remaining claims. More specifically,

defendants argue that the banking records are not relevant to the

Lesters’ remaining joint venture claim and successor liability

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allegations. Defendants assert that a joint venture claim is

based on a single transaction which, in this case, “is the sale

of one vehicle to the Plaintiffs in March of 2011.” (Doc. #101

at 1). Defendants argue that they have produced every banking

document pertaining to that sale and they are entitled to the

protective order as to any additional banking documents. 

Defendants also assert that the second amended complaint contains

no claim for successor liability and, as such, the Lesters cannot

seek the banking records on this basis. Alternatively,

defendants argue that “even if there was a successor liability

claim in the case, it would be subject to dismissal as premature

on the same grounds as Plaintiffs’ already dismissed alter ego

claim.” Id. at 2-3. 

In light of the pending objection, defendants’ motion for a

protective order was recommitted to the Magistrate Judge for

further proceedings in light of the District Judge’s ruling on

the motion to dismiss. On December 13, 2013, the Court issued an

order allowing any party who wished to submit additional briefing

on the motion for a protective order to do so in a supplemental

brief to be filed by December 19, 2013. (Doc. #103). The

Lesters submitted a supplemental brief on December 19, 2013. 

(Doc. #104). On December 23, 2013, defendants filed a “a brief

reply in response to Plaintiffs’ December 19, 2013 Supplemental

brief.” (Doc. #105 at 1).

In their supplemental brief, the Lesters argue that “the

requested banking records, which have already been produced by

non-party The Home Loan Savings Bank, are relevant to claims in

the second amended complaint, specifically, the Lester’s [sic]

joint venture and successor liability allegations.” (Doc. #104

at 1). The Lesters argue that a joint venture under Ohio law is

not, as defendants assert, limited to a single transaction. 

Rather, the Lesters claim that allegations pertaining to a joint

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venture may relate to a limited period of time, as opposed to a

single transaction. As such, they argue that the banking records

over time are relevant to that claim. As to their successor

liability allegations, the Lesters also argue that the documents

are relevant to their “claims that Wow Car Company, Ltd. is

liable as the successor to the ‘Wow Car Company’ joint venture

operated by Hartzler and Erwin.” (Doc. #104 at 4). The Lesters

argue that they are not required to plead “a specific, separate

claim for successor liability to place such a claim before the

Court,” and their allegations that “Wow Car Company, Ltd. – who

has been a party to this lawsuit since its inception – is liable

as the successor to ‘Wow Car Company’” are sufficient. Id. at

5. Based upon their argument that the banking records are

“plainly relevant,” the Lesters urge this Court to overrule

defendants’ objection. Id.

Defendants oppose the Lesters’ supplemental brief, arguing

that the case law relied upon by the Lesters actually supports

defendants’ position on joint venture and successor liability law

in Ohio. Defendants reiterate their position that a joint

venture claim is based on a single transaction and “not ongoing,

long-term business operations.” (Doc. #105 at 1). According to

defendants, the single transaction involving the sale of one

vehicle by Ms. Hartzler does not justify the Lesters’ “attempts

to delve into four years of banking records for all

Defendants....” Id. at 2 (emphasis in original). Defendants 

also argue that the authority relied upon by the Lesters relating

to their allegations of successor liability does not support

entitlement to the subpoenaed information. Defendants argue that

“[i]n every one of the cases cited by Plaintiffs, the

plaintiff(s) . . . specifically asserted a successor liability

claim.” Id. (emphasis in original). Based upon these arguments,

defendants again request that the Court grant their joint motion

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for a protective order.

II. Discussion

The governing issue before the Court is whether the District

Judge’s decision to dismiss the Lesters’ alter ego claims in this

case warrants reconsideration of this Court’s November 13, 2013

opinion and order denying defendants’ joint motion to quash the

subpoena issued to Home Loan and/or for a protective order. In

resolving this issue, the Court first examines whether the joint

venture claim is sufficient to entitle the Lesters to the

discovery of the information subpoenaed from Home Loan. 

In ruling on the motion to dismiss, the District Judge

examined the Lesters’ joint venture claim in detail. The Court

recognized that the essential elements of a joint venture

partnership are:

1. a joint contract;

2. an intention to associate as joint venturers;

3. community of interest and control, including

contributions to the joint venture;

4. the mutual right to direct and control the purpose

of the joint venture; and

5. an agreement for the division of profits and

losses-jointly, not severally.

(Doc. #94 at 5) (citing Blessing v. United Steel, Paper and

Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers

Int’l Union, 244 F. Appx. 614, 619 (6th Cir. 2007)). The Court

found that the Lesters alleged sufficient facts that, accepted as

true, allowed it to draw the reasonable inference that Mr. Erwin

and Ms. Hartzler “intended to engage in and carry out a single

business adventure for joint profit, for which the parties

combined their efforts, property, money, skill and knowledge.” 

Id. at 6. More specifically, the Court noted:

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the Lesters allege that in 2009, Hartzler and Erwin

planned the opening of Wow Car Company, and they agreed

to combine their efforts, property, money, skills, and

knowledge to operate the business. They further allege

that Hartzler obtained the Motor Vehicle Dealer’s

License, and Hartzler, Hartzler’s father, and Erwin

financed the purchase of cars for sale with Erwin

financing more than 50% of the inventory. Additionally,

the Lesters aver that the parties had an agreement that

Erwin was to cover the operating expenses and teach

Hartzler how to buy cars and that Hartzler and Erwin

agreed to split the profits based partially on who

financed the vehicle, with Erwin also being paid

additional fees generated from each sale. Finally, they

allege Erwin and Hartzler had discussions contemplating

that at some point Hartzler would branch out and open a

new dealership, and that Erwin would take over Wow Car

Company.

Id. 

Defendants correctly observe that a joint venture under Ohio

law may be defined as an agreement “entered into for a single

transaction.” Busler v. D & H Mfg., Inc., 81 Ohio App.3d 385,

391 (10th Dist. 1992). Significantly, however, a joint venture

under Ohio law is not limited to a single transaction. The

relevant agreement may also be for a “limited period of time.” 

Id. Here, the Court looked beyond the “single transaction”

referred to by defendants which involved selling the vehicle at

issue to the Lesters. Instead, the Court found that the joint

venture alleged by the Lesters consisted of a broader agreement

to operate a business to sell vehicles for a limited period of

time. 

The issue to be resolved by this Court is whether the

information subpoenaed from Home Loan is reasonably calculated to

lead to the discovery of evidence relevant to the Lesters’ joint

venture claim. As the Court found previously, the information

sought is relevant to establish the financial relationships

between defendants. The Lesters argue that the banking records

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“are relevant to showing an association between Hartzler and

Erwin to engage in a single business adventure, i.e. the sale of

used cars for a limited period of time, for joint profit, for

which they combined, inter alia, efforts, property, and money.” 

(Doc. #104 at 3-4) (internal quotations omitted). This Court

agrees.

The Lesters rely upon Ohio Valley Bank v. Copley, 121 Ohio

App.3d 197, 206 (4th Dist. 1997) in arguing that the banking

records are competent, credible evidence of a joint venture. 

That case involved, inter alia, a challenge to the trial court’s

determination that Cliff Browning, a contractor, and his wife,

Marie Browning, engaged in a joint venture in the construction of

a residence. Id. The Court of Appeals found the trial court’s

ruling to be supported by “competent, credible testimony and

evidence” showing that “Marie (1) opened the business account and

was the sole authorized signer for the account, (2) wrote all

checks to pay for all workers, subcontractors, and suppliers, (3)

deposited money in the account from other sources for the benefit

of the construction project, and (4) controlled the business

records.” Id. The Court of Appeals overruled the relevant

assignment of error on this basis.

Defendants argue that Copley weighs in their favor,

demonstrating that a joint venture claim is based on a single

transaction. According to defendants, the transaction in Copley

involved “the construction of one home” and, in this case, the

single transaction involved the sale of one vehicle. (Doc. #105

at 1) (emphasis in original). Based upon their representation

that they have produced every document relating to the sale of

the vehicle, defendants urge that the subpoena seeks only

irrelevant documents. 

As noted above, Ohio law provides that a joint venture may

be formed either for the purpose of engaging in a single

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transaction or for the purpose of engaging in multiple

transactions over a limited period of time. See Busler, 81 Ohio

App.3d at 391. The latter is clearly alleged here, and the law

does not limit joint venturers to associating for the purpose of

engaging only in a single transaction. See also Roberts v.

Weiner, 137 Conn. 668, 671 (1951)(explaining that a general

partnership “is formed for carrying on a general business, while

the latter [a joint venture] is more often limited to a single

transaction or course of transactions”)(emphasis supplied). The

fact that Copley involved a single transaction does not undermine

its determination that banking activity may serve as evidence of

a joint venture. Because the banking records sought are relevant

on their face to the joint venture claim, defendants have the

burden to establish the lack of relevance. See Hendricks v.

Total Quality Logistics, LLC, 275 F.R.D. 251, 253 (S.D. Ohio

2011). Defendants’ argument that any joint venture was

necessarily limited to the sale of a single vehicle,

notwithstanding the Lesters’ allegations that the joint venture

engaged in a course of transactions, does not satisfy that

burden, and defendants have advanced no other arguments on the

issue of relevance. Accordingly, the Court will reaffirm its

earlier order that these documents be produced. Moreover, having

found that the Lesters are entitled to the subpoenaed information

based upon their joint venture claim, the Court need not examine

their entitlement to the same information based on their

allegations of successor liability. 

III. Conclusion

Based on the foregoing, this Court’s November 13, 2013

Opinion and Order is reaffirmed. If it has not already occurred,

the requested documents shall be produced within fourteen days of

the date of this order. 

IV. Procedure for Seeking Reconsideration

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Any party may, within fourteen days after this order is

filed, file and serve on the opposing party a motion for

reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.

I., F., 5. The motion must specifically designate the order or

part in question and the basis for any objection. Responses to

objections are due fourteen days after objections are filed and

replies by the objecting party are due seven days thereafter. 

The District Judge, upon consideration of the motion, shall set

aside any part of this Order found to be clearly erroneous or

contrary to law.

This order is in full force and effect, notwithstanding the

filing of any objections, unless stayed by the Magistrate Judge

or District Judge. S.D. Ohio L.R. 72.3.

/s/ Terence P. Kemp 

United States Magistrate Judge

 

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